And what's up with the crickets dying, no matter what you do?

They are not balanced properly, Carl from Carl's Sim Guides made a video about it recently, he had a sim care for his bugs constantly and they still died. I find it fascinating that not a single developer noticed this.

LittleMsSam have made a mod “Nurture Gives More Health” which lowers the time to nurture and increases the affect on Health which apparently fixes it...

That feature is a tad broken at the moment it seems. Carl's Sims Guide showed how a sim needs to more or less be constantly interacting with bugs to keep them happy, and even then they were dying.
There is a mod that fixes it, speeding up the interaction. Might be useful to get as who knows when it'll be fixed in a patch.

I hate cuddling the bugs to help fix their health. It makes no sense if you know anything about bugs. Hands-off is the best approach otherwise you risk damaging the bug's legs, body, or antennae to the point of risking their health. Cuddling risks death by crushing - no wonder this doesn't help them!

Leave the recycled my first pet stuff animation out of the care of insects entirely and just make something like 'clean cage' or whatever - keep their environment healthy and your bugs will be fine as well.

There's also the fact that one of the main reasons for raising edible bugs is that they're not supposed to be "cuddly" animals like birds or mammals. Animals like chickens or rabbits are tasty but they're also cute and not everyone can bring themselves to butcher them for food. If you're going to go through the trouble of raising crickets or mealworms for your protein instead of more traditional livestock, then it seems kind of self defeating to go around petting and giving your new edible grubs love and attention.

If they die you can actually still nurture them and bring them back to life. I think maybe the trick is to get them all the way to thriving before collecting anything from them. Then when you collect, it only knocks them down to fine, then nurture them again and they should go back up to growing.

What great tips! Thanks for all the responses, and I will definitely get her mod, I have many of them anyway. <3

I was only able to harvest 1 bio fuel and the next time the bug house had "ready" on it, the choices were greyed out and it said "not ready." Hopefully the devs will read the forums and we'll get a fix next time. (Lol, what am I saying, I won't be holding my breath.)